International Housing Coalition Argues for New MCC ERR Analysis

The International Housing Coalition published a new report that assesses how the Millennium Challenge Corporation uses rates of return analyses to assess project funding proposals from qualifying countries, evaluates the usefulness of this approach in estimating economic growth and poverty alleviation potential, and offers recommendations to improve the approach to better capture the returns from investments in urban infrastructure. It's an interesting piece and one which gets at the broader issue of whether the MCC's economic rate of return analysis captures well the distributional effects of growth and reminds me of issues others have raised regarding whether it allows for investments in social sector projects that can have longer term return horizons. While the paper makes a compelling link between investments in urban infrastructure and economic growth, I can't help but be reminded of how often sectoral interest groups push for changes in foreign aid to better accomodate their particular agenda. I wonder whether there is an unmet demand from the MCC compact countries themselves (since they drive the proposal process) that is in fact being rejected because it cannot meet the ERR requirements. Any thoughts?